FTSE Russell China Bond Research Report Q3 2018

|
Includes: CBON, CHN, CN, CXSE, DSUM, FCA, FLCH, FXI, FXP, GXC, KCNY, KGRN, MCHI, PGJ, TDF, WCHN, XPP, YANG, YAO, YINN, YXI
by: FTSE Russell

Summary

On August 24, China implemented real-time delivery-versus payment settlement - cleared through China Central Depository and Clearing Co. - for the Bond Connect programme.

This marks the removal of a significant barrier to offshore investment via the scheme for European Undertakings for Collective Investment in Transferable Securities, among other funds, institutions and investor groups.

The appeal of China government bonds may be increasing as trade tensions are causing capital flight to safer assets, and as China's policymakers support more liquidity in the country’s financial.

However, over the past 3 months, the benchmark 10-year yield has rebounded by over 15 bps from its early August low point to reach 3.7% at end of September, on the back of rising borrowing costs and newly issued government debt.